Social Security Organization or also known as SOCSO is an organization that was established in 1971 under the Ministry of Human Resources. The Ministry of Human Resources was previously known as Ministry of Labour. The objective of this establishment is to provide social security protections to all workers and employees working in Malaysia.
SOCSO Functions
The SOCSO functions are as the following:
- Registering employers and employees
- Contribution collection from employers and employees
- Payment of benefits to the workers or their dependents if unfortunate tragedy strikes
- Provision of vocational and physical rehabilitation benefits
- Promoting awareness on occupational safety and health
Employer
There are 2 different types of employers. They are known as principal employer and immediate employer. Principal employer refers to an employer who has directly employed an employee to work for him or her. The principal employer is responsible for the wages payment and all the service matters related to that employee. An immediate employer refers to an employer who works for a principal employer. This immediate employer will then undertake some of the work of the principal employer by using a sub-contract. The immediate employer also has direct control over the employees employed by him or her. Both principal and immediate employers that employ one or more than one employee have to register and contribute to SOCSO for all the employees stated under the Employee’s Social Security Act 1969 on a monthly basis. Furthermore, the principal employer is also liable to make sure that all the employees employed by the immediate employer are registered and they are paid with their monthly contributions. The principal employer will be liable if he or she fails to do so.
Employee
An employee is defined as an individual who has been employed by an employer either under apprenticeship or a contract of service as stated under the Act. Employees that are earning RM3000 or lesser have to contribute to SOCSO and employees that are earning more than RM3000 have the option to be covered under the act if they have not registered or contribute to SOCSO. However, there is also a principle known as Once In, Always In. This principle is created employees that were previously registered with SOCSO and is currently earning more than RM3000. In this principle, these employees have to continue to contribute to SOCSO under the First Schedule of the Act. After an employee is eligible under the Act, he or she will always to eligible for the coverage regardless of his or her next monthly wage amount. All employees that are eligible for SOCSO have to register and contribute to SOCSO without fail.
Wages Definition
Wages are defined as all payments paid to the employee based on an hourly rate, daily rate, weekly rate, piece rate or task rate. Payments by an employer to any statutory fund on the behalf of employees, mileage claims, gratuity payments or payments for retrenchment or dismissal and annual bonus are not defined as wages in this context.
The wages include payments such as:
- Salary
- Overtime payments
- Service charge
- Commissions
- Payments for leave, annual leave, maternity, rest day, public holidays and others
- Allowances, incentives, food, cost of living, housing, shifts and others
However, there is a certain group of employees that are not covered under SOCSO. The group comprises of government employees, domestic servants, self-employed persons, foreign workers, business owners and spouses of partnership or sole-proprietorship.
Benefits of SOCSO
SOCSO was incorporated with the objective to provide assistance financial and medical assistance to employees that have their capabilities reduced as a result of accidents or diseases. SOCSO also aims to provide assistance to the employees’ dependents in the form of pensions if the employee dies. The benefits under this scheme are divided into 2 parts known as Employment Injury Scheme and Invalidity Pension Scheme.
The Employment Injury Scheme provides protection and coverage for employees that suffer from employment injury. This include medical benefits, temporary disablement benefit, permanent disablement benefits, constant attendance allowance, rehabilitation benefit, return to work programme, dependent benefit, funeral benefits and education benefits. It is also important to understand that the employees might still be covered if they stopped contributing to SOCSO. However, the said employee has to fulfil certain conditions. This is a fact that has gone unnoticed by many people.
The Invalidity Pension Scheme provides coverage for employees that experienced invalidity or death due to any causes that are not related to their employment. Invalidity is measured by the inability of that employee to achieve one-third of the earnings of a sound insured person. The inability may be just temporary or forever. The benefits include invalidity pension, invalidity grant, survivors pension, funeral benefits, facilities for physical rehabilitation and dialysis and education benefits. The survivors pension is also important as many people will assume that the pension will stop after the employee has passed away. However, this is not the case as the dependent family members can also apply for the pension to be transferred to them through the survivors pension scheme.
Another benefit of SOCSO is the privilege to get free health check-ups. SOCSO has issued free health check vouchers to 2.2 million eligible Malaysian candidates. However, a staggering 1.7 million of them declined the initiative. Although it takes time and effort to go through the entire process, employees are encouraged to take some time off work to make use of this free service.
What Are You Expected To Contribute?
There are two types of categories for SOCSO contribution. The first category is known as Employment Injury and Invalidity Schemes and the second category is known as Employment Injury Scheme Only. Under the Employment Injury and Invalidity Schemes, all of the employees must be below the age of 60 years old and only 0.5% of the employee’s monthly wage is to be extracted out for SOCSO contribution. If the figure is higher than that, the related parties should report to relevant authorities. Under the Employment Injury Scheme Only, employees can be 60 years old and above and still currently work. It is also for employees above the age of 55 years old that has made their first SOCSO contribution. In this category, the insured person will receive invalidity pension if they are working and earning less than one-third of a monthly salary before invalidity happens. The employer has to bear the contribution costs at 1.25% of the monthly wages to SOCSO.
Registering For SOCSO
In order to register for SOCSO, there are two forms for the employer and the employee to fill in respectively. The employer is required to fill in the Form 1 Employer Registration Form while the employee is required to fill in the Form 2 Employee Registration Form. After that, SOCSO will issue an employers code number that can be used in all correspondence with the related company.
For more information about SOCSO, kindly visit Pertubuhan Keselamatan Social (PERKESO) headquarters at Menara PERKESO at Jalan Ampang, Kuala Lumpur or visit PERKESO’s official website. Alternatively, you can also contact them through their customer service contact number. The operating hours are from Monday to Friday 8AM to 5.15PM. Lastly, do know that it is an offence if your employer fails to make contributions to SOCSO on your behalf.